How do Lay, Skilling and Fastow see themselves?

By Michael Lewis / BLOOMBERG , BERKELEY, CALIFORNIA

One of the interesting aspects of the Enron scandal is the different strategies the chief villains have employed to exculpate themselves.

Kenneth Lay, the former chairman of the bankrupt energy trader, has decided he can plausibly cast himself as a stupid person taken advantage of by brighter underlings. Jeffrey Skilling, the chief executive who quit before the final collapse, believes he can set himself up as the guy who wasn't around when anything bad happened and who "got off in Ireland" before the ship went down.

Andrew Fastow, the chief financial officer who profited from partnerships with Enron Corp, clearly thinks if he lays low like Brer Rabbit, the public inquiry will focus on other, more senior people and bigger, more systematic problems -- and that he will be allowed to play the role of an underling who was simply doing what his bosses told him to do.

Implicit in each strategy is a rejection of the other two.

Had any two of these men collaborated on their stories, they might have been able to transfer the blame to the third. As it is, each has created a defense that more or less lays the fault for what happened at the feet of the other two.

Although none of their poses is even faintly plausible to a close reader of the news, they throw up enough smoke to cloud the view and dissuade casual observers, at least for a bit, from seeing just how culpable all three men must be.

In short, all three of the chief villains are playing the same game as defendants that they did as businessmen. Their strategies are to public relations what Enron's books were to investor relations.

Of course none of the three men would view his own behavior so cynically. Villains never see themselves as villains. People who behave badly tell themselves a story to make themselves feel better. I'll bet the story all three men tell themselves is more or less the same -- and very different from the story they are presenting to the public. It runs something like this: ``Sure, I knew what was going on. Sure, I was responsible. So what? I was only, in a sense, following orders.

``Enron came of age as a company at a time when the market rewarded, nay demanded, grand illusions. We who ran the place practiced a bit of creative accounting, hiding debt as equity, and booking notional future profits as real current ones. The market did not merely allow us to do this; it encouraged us to do this. Indeed, to one degree or another, everyone we knew was doing it.

Everyone we did business with knew what we were doing.

``So we kept doing it, and the market loved it. Our actions made a lot of people -- shareholders, employees, customers, charities, politicians, bankers, the Houston Astros -- very happy.

``And then something changed: the mood in the air. One day perceptions created their own reality. The next, reality bridled at the association. One day everyone wanted to view us as a great success. The next, they began to question us, in new and disturbing ways.

"The creative accounting for which we had been so amply rewarded -- and which, as I say, had made so many people so happy for so long -- meant that we had become highly leveraged, and vulnerable to our creditors. When their mood shifted, these fickle friends for whom we had done so much staged a run on our bank. Why? We were doing nothing different from what we'd always done. We didn't change; the world did."